WTO 20th Anniversary Event – least developed countries
"Twenty years of supporting the integration of
Least Developed Countries into the Multilateral Trading System"
12 October 2015
Report by
the Chairman of the Sub-Committee on Least Developed Countries
1.1. As part of the commemoration of the
WTO's 20th Anniversary, the WTO Secretariat organized a Least Developed
Country (LDC) event titled "Twenty Years of Supporting the Integration of
Least Developed Countries into the Multilateral Trading System". The event
took place in the morning of 12 October 2015 under the aegis of the
Sub-Committee on LDCs. It was chaired by Ambassador Roderick Van Schreven
(Netherlands), Chairman of the Sub-Committee on LDCs. On this occasion, the
Secretariat prepared a Note (WT/COMTD/LDC/W/61), which, inter alia,
traced the 20-year relationship between the WTO and LDCs, in particular the key
developments and decisions taken in favour of LDCs, the institutional support
provided and the trade capacity-building initiatives put in place.
1.2. The event consisted of an opening
session with the WTO Director-General and the UNCTAD Secretary-General,
followed by two substantive sessions: Session 1 reviewed the progress made in
integrating LDCs into the multilateral trading system (MTS) over the past 20
years, while Session 2 took a forward-looking perspective on how the WTO could
help LDCs overcome the remaining challenges.
1.3. The event was well attended. A
summary of the discussion of the sessions is provided below.
Opening
Session
1.4. The opening session was addressed
by WTO Director-General Roberto Azevêdo and UNCTAD Secretary-General Mukhisa
Kituyi. Prior to the start of the LDC event, they had signed a joint
declaration on increased cooperation between the WTO and the UNCTAD in the area
of trade and development, which reflected the common goal of the two
organizations of helping developing countries, and especially the LDCs,
integrate into the global economy. The declaration reaffirmed the
collaboration between WTO and UNCTAD to keep on promoting trade as a tool for
development.
1.5. In his opening statement, WTO
Director-General Azevêdo reiterated his personal commitment to support the
integration of LDCs into the MTS. Salient points of his statement included: (i)
WTO agreements and decisions adopted over the past 20 years contained
flexibilities and special provisions that take into account the specific needs
of LDCs; (ii) LDCs experienced higher trade growth than the rest of the world
during the period 1995-2013, with a rise in the share of exports of goods and
services; (iii) the LDC Group had become very active over the years, gradually
enhancing their participation in different bodies and committees of the WTO;
(iv) LDCs were involved in about 45% of WTO's technical assistance activities
each year; (v) since the launch of the
Aid-for-Trade Initiative, Aid-for-Trade (AfT) commitments to LDCs had doubled,
reaching US$18 billion in 2013; and (vi) the important role played by the
LDCs in the success of the Bali Ministerial Conference and that work is ongoing
to advance each of the Bali decisions. He underlined that a successful Pledging
Conference of the Enhanced Integrated Framework (EIF) would be a significant
outcome of the Tenth WTO Ministerial Conference (MC10). He urged the LDCs to submit
textual proposals for MC10 as soon as possible so that dedicated negotiations
could begin.
1.6. In his opening statement, UNCTAD
Secretary-General Kituyi recalled how UNCTAD had recommended the creation of
the LDC category in the early 1970s, subsequently leading to the categorization
of the group. He pointed to the continuing challenge of over-dependency of a
large number of LDCs on primary commodities and that the share of manufacturing
products in total LDC exports had declined in recent years. The stalling of the
negotiations in the WTO was considered a worrying sign – as trade rules were
being developed in forums where LDCs were not necessarily involved. Moreover,
the mega-regional trade deals threatened to wipe out the preferences accorded
to LDCs. The LDC exporters also faced daunting challenges in penetrating
markets as private standards, set by chains of a few dominant retailers, were
increasingly becoming a common place. He also underlined the importance of
regional integration to enhance the competitiveness as well as to enter global
value chains (GVCs). The contribution of the MTS to the development of LDCs
would be measured against the objectives of the UN Istanbul Programme of Action
(IPoA) and the 2030 Agenda for Sustainable Development. He stressed that a new
momentum would be needed if LDCs are to reach a 2% share of world trade by
2020, as envisaged by the IPoA. He urged WTO Members to deliver on core issues
at Nairobi, including a substantial package for LDCs, so that the post-Nairobi
Agenda could take in new issues such as e‑commerce.
Session 1: LDCs and the WTO – An Overview of
20 Years Integration into the Multilateral Trading System
1.7. The panel of Session 1 comprised the following speakers: (i) H.E.
Mr. Shameem Ahsan, Ambassador of Bangladesh (LDC Coordinator); (ii) H.E. Ms.
Yvette Stevens, Ambassador of Sierra Leone (Chairperson of the EIF Board);
(iii) H.E. Mr. Marc Vanheukelen, Ambassador of the European Union; and (iv)
Professor Alan Winters, University of Sussex.
1.8. Ambassador Shameem Ahsan highlighted key
developments achieved over the past 20 years, including on duty-free quota-free
(DFQF) market access, preferential rules of origin, the LDC services waiver,
extensions of transition periods to implement the TRIPS Agreement,
flexibilities in the Doha Round negotiations, LDC accessions to the WTO,
institutional support to the LDCs by the WTO Secretariat, and capacity-building
initiatives such as the EIF, which had all played an important role towards
further integrating LDCs into the MTS. He thanked Members for their efforts to
help improve LDCs' participation in world trade and acknowledged that progress
had been made.
1.9. He pointed to a number of remaining challenges and steps to be
taken, including at MC10. He highlighted that all LDCs faced the common challenge
of a lack of export diversification. He noted that the world was moving ahead
with trade arrangements that held implications for LDCs, including preference
erosion, particularly in light of regional trade agreements such as the Trans‑Pacific
Partnership. He mentioned that Members' commitments concerning LDCs were often
weakened since such commitments were conditioned on the overall progress of the
Doha Round. Furthermore, it was difficult to advance LDC interests in a
give-and-take setting, since LDCs had not much to offer. He called for the
implementation of Ministerial Decisions and Declarations underlining in
particular the need for DFQF market access to create demand for LDC goods,
liberal preferential rules of origin and preferential market access under the LDC
services waiver, in particular with respect to GATS mode 4. In order to enhance
the capacity of LDCs to participate in the work of the WTO, he also suggested
that each LDC mission in Geneva should receive one intern on a yearly basis.
1.10. Ambassador Yvette Stevens, the
Chairperson of the EIF Board, focused on the importance and achievements of the
EIF for the LDCs. She recalled important milestones such as the High‑Level
Meeting on LDCs in 1997 which led to the establishment of the Integrated Framework,
the predecessor to the EIF, as well as the 2005 Hong Kong Ministerial
Conference during which the Aid-for-Trade Initiative was launched. She
characterized the EIF as uniquely placed to help LDCs use trade as a tool for
sustainable development and that it stood out due to a number of factors and
activities, including through the Diagnostic Trade Integration Studies (DTIS)
which helped LDCs elaborate their trade needs and priorities; support to
trade-related policy and institutional capacity building; support to mainstream
trade into national development programmes; support to coordinate AfT needs at
the country level; and support to feasibility studies as well as small scale
priority projects as a catalyst to leverage additional AfT resources.
1.11. She also highlighted the achievements of the EIF since its
establishment, including the support of 23 donors to enable 136 projects in 51
countries across Asia, the Pacific and Africa. Pledges for the first phase of
the EIF totalled US$252 million of which US$202 million had actually been
received. She mentioned that the evaluation of the first phase of the EIF
Programme had recognized that it provided value for money and had recommended
its extension for a second phase. She recalled the second phase of the EIF (2016-2022)
with a budget target of US$250‑320 million and the importance of the Pledging
Conference, which would take place at the outset of MC10.
1.12. She underlined that the global commitment to increase Aid for Trade for
LDCs and the mentioning of the EIF in the 2030 Agenda for Sustainable
Development reflected the recognition that the EIF had been instrumental in
helping LDCs develop their trade policies, identifying trade priorities and
deriving benefits from AfT support and the MTS. Referring to the Third Financing
for Development Conference and the 2030 Agenda for Sustainable Development, she
highlighted the importance of trade as a tool for development and for the
achievement of the Sustainable Development Goals.
1.13. Ambassador Marc Vanheukelen emphasized
how LDCs had remained marginalized in the MTS due to a lack of productive
capacity, limited diversification, inadequate infrastructure and, in some
cases, poor governance. He drew on the past two decades and stressed that the
European Union (EU) and its member States had been at the forefront of
initiatives to help LDCs integrate further into the global economy. He
mentioned that the EU and its member States had been pioneers behind granting
DFQF market access to LDC exports. He also recalled the EU's Everything But
Arms (EBA) scheme adopted in 2001, and that the EU was the top destination for
agricultural products and manufactures from LDCs.
1.14. Furthermore, he mentioned how positive discrimination remained
important for LDCs and that a one-size-fits-all approach in the design of
flexibilities under special and differential treatment (S&D) would dilute
the differential advantages of LDCs, since countries at different stages of
development often encountered different challenges. Therefore, he expressed some
concern with a number of G90 proposals on S&D, which lacked differentiation
among developing countries of different income levels. He further elaborated
that the ultimate goal of S&D was to help LDCs develop their economies and
graduate from LDC status in order to take on normal WTO obligations. He
recalled that the EU and its member States were the largest providers of Aid
for Trade. The EU was currently aligning its Aid for Trade with a focus on
LDCs, which had already resulted in an increase of AfT commitments to LDCs
reaching EUR 2.6 billion in 2013, which constituted 24% of the total. He
expressed the EU's commitment to work with the LDCs and other Members to build
a meaningful LDC package for MC10.
1.15. Professor Alan Winters recalled a number
of achievements for LDCs in the WTO. He raised the question of allocative
efficiency, which examined the efficiency of the system by examining whether
the right things had been done as opposed to whether things had been done right.
He mentioned that Aid for Trade, trade facilitation and the DTISs of the EIF had
provided evidence of allocative efficiency. On market access, he was of the
view that 97% DFQF market access might not allow LDCs the intended benefits.
Preferential access to emerging economies was considered to promise the highest
returns, as preference margins would be higher than in developed economies due to
higher most-favoured nation tariffs in emerging economies. He also mentioned
that due to the liberalizing functions and nature of the WTO, preferences could
inevitably erode.
1.16. In his view, few important issues had not been addressed at the WTO.
He noted that the lack of progress with respect to GATS mode 4 (movement of
natural persons) represented a missed opportunity. Moreover, in terms of
rule-making, he highlighted two points. Firstly, he expressed concern that
mega-regional trade agreements were going to create rules which would be
imposed on other countries and that the rule-making process of mega-regionals
should be made more inclusive. Secondly, he pointed out that negotiating
complex trade rules in the MTS took away resources from LDCs, which might
better be used in other policy areas; and that ways should be found to
represent the interests of LDCs in the rule-making process in a less resource‑intensive
way. He concluded by underlining the importance of LDCs' own trade policy
complementing international efforts such as Aid for Trade or the Trade
Facilitation Agreement (TFA). Since trade was a necessary rather than a
sufficient condition for growth, he reiterated his call to make trade policies
simpler and transparent so that LDCs could focus on other important policy
areas such as education.
Session 2: LDCs and the WTO – Looking Ahead
1.17. The panel of Session 2 comprised the following speakers: (i) H.E. Mr. Deepak Dhital, Ambassador of Nepal;
(ii) H.E. Mr. Nathan Irumba, former Ambassador of Uganda; (iii) H.E. Mr. Harald
Neple, Ambassador of Norway; and (iv) Emeritus Professor Jaime de Melo,
University of Geneva and Foundation for International Development Study and
Research (Ferdi).
1.18. Ambassador Deepak Dhital reminded
participants that Nepal, together with Cambodia, was the first LDC to accede to
the WTO under Article XII in 2004. Like other accessions, Nepal made
significant commitments, higher than that of original WTO LDC Members. He
recommended that the Accession Guidelines be further simplified for LDCs. He
noted that LDCs faced a number of challenges, including supply-side
constraints, high trade costs and inadequate productive capacity. He underlined
the importance of full DFQF market access, relaxation of preferential rules of
origin, operationalization of the LDC services waiver, implementation of the TFA,
S&D, removal of cotton subsidies, and the need for a TRIPS waiver for
pharmaceutical products linked to LDC status. He also encouraged Members to
address non-tariff measures (NTMs), which constituted barriers for LDCs to take
advantage of the preferences granted to them. He also underlined the importance
of capacity building initiatives for LDCs such as the Aid-for-Trade Initiative,
the EIF, the Standards and Trade Development Facility and the TFA Facility and
looked forward to a successful pledging conference for the second phase of the
EIF.
1.19. He expressed hope that Members would help LDCs develop a meaningful
and substantive package for MC10, which could mark another important step to
use trade as a tool for development. He concluded by emphasizing that trade
should be used as an engine for growth, particularly in the context of the 2030
Agenda for Sustainable Development and the IPoA for the LDCs for the Decade
2011-2020.
1.20. Ambassador Nathan Irumba highlighted
that whilst DFQF market access had been a welcoming outcome, market access
would only be meaningful when market penetration would be possible. He also added
that the concentration of LDCs in primary commodities had increased their
structural vulnerabilities. He stressed the need to add value to LDC exports
and to move up the value chain. He urged for an initial focus on regional value
chains in order to subsequently benefit from GVCs. He highlighted the
importance of agriculture for LDCs and hoped for progress in agriculture at
MC10. Furthermore, he opined that the global economy had failed to advise on a
mechanism for transfer of technology to LDCs. Members should, therefore,
operationalize Article 66.2 of the TRIPS Agreement.
1.21. He suggested that LDCs should keep track of developments taking
place under mega‑regional trade agreements, and not feel obliged to make
hastened decisions at the multilateral level that could impinge on their policy
space. He concluded by highlighting that the biggest obstacles to LDC trade
were not tariffs but NTMs, such as standards and technical regulations. Since
the mega-regionals were likely to increase the level of standards, he stressed
the need for technical assistance to help LDCs meet those standards.
1.22. Ambassador Harald Neple started by
agreeing with other speakers that the LDCs' share in world trade was too low.
He mentioned that the LDCs needed to overcome a number of trade and non-trade
related challenges to fully benefit from trade and that the international
community and the individual LDC had a shared responsibility to address these
challenges. Trade policies needed to be developed and implemented in
conjunction with other domestic policies, including on gender, poverty
alleviation, education, governance and investment frameworks.
1.23. Besides supply-side constraints such as inadequate infrastructure
and weak productive capacities, he pointed to governance, transparency and
anti-corruption policies, institutional capacity, workforce skills, investment
frameworks and private sector involvement as remaining challenges for LDCs.
Trade should be seen as an instrument in development policy. He indicated that
reducing trade costs in LDCs was indispensable to integrate into world trade;
thus, it was crucial to implement the TFA. Furthermore, South-South trade and
trade with neighbouring countries should be the first step to trading with the
rest of the world.
1.24. He encouraged LDCs to make better use of the WTO consultation
processes, as well as of the Trade Policy Review Mechanism to address
particular trade issues identified in that process. He emphasized that
non-implementation of WTO commitments and obligations was not the way forward
if the objective was to integrate into the MTS, though he recognized that LDCs
needed more time and assistance to put such policies into place. He mentioned
that the implementation procedures of the TFA could be a model for future
agreements. He characterized the EIF as an efficient tool to help LDCs
integrate into the MTS and highlighted the need to forge partnerships under the
EIF to leverage targeted assistance within each LDC.
1.25. Professor Jaime de Melo pointed out that
the LDCs' share of global trade would have in fact stagnated if oil was
excluded from the equation. He noted that trade costs for LDCs had fallen less
rapidly than that of the rest of the world. He opined that preferential rules
of origin were still complex and that simplifying rules of origin was the
easiest trade policy prescription that would provide the largest gains for
LDCs. Giving an example, he proposed that if preferential margins were not
high, preference granting countries could eliminate the requirement of rules of
origin.
1.26. He recommended the preparation of regional DTIS, considering the
emerging importance of regional integration, in particular for African
countries. On regional integration, he furthermore posited that deeper
integration with few parties could be more meaningful than shallow integration
with a larger membership. He suggested that the Aid-for-Trade Initiative, which
had become increasingly complex, could be refocused through the TFA. The TFA
had the potential to contribute to lower trade costs in LDCs.
Conclusion
1.27. Overall, there was an interactive dialogue between the panellists
and the audience. Some themes which emerged during the discussion included the
fact that the implementation of the TFA would be a potential instrument to
reduce trade costs in LDCs. Special and Differential Treatment provisions in
the TFA were regarded as a possible model for the future S&D architecture
in the WTO. Simplified rules of origin, improved DFQF access for LDC products
and measures to enhance LDC services exports were seen as potential
deliverables at MC10 that could provide benefits to the LDCs. Also the
importance of an outcome on cotton at MC10 was underlined. Though considered
difficult, mode 4 under GATS was highlighted as an area offering great
potential to the LDCs. It was also highlighted that, while S&D remained
important, LDCs should be more proactive in order to dispel the perception that
they did not have a lot to offer in the framework of give-and-take
negotiations. Regarding policy making and technical-assistance activities, it
was mentioned that the areas of trade and development should be more connected.
1.28. Some closing remarks were made by the LDC Facilitator, Ambassador
Steffen Smidt, who made three appeals: firstly, WTO Members should continue
showing readiness in responding to the needs of LDCs; secondly, LDCs should
articulate specific proposals, which are realistic and doable, taking into
account the time available before MC10; and lastly, the LDC Group should work
in cohesion, which had been the cornerstone of their success over the past
years and which would be the only way to secure outcomes in favour of them.
1.29. In conclusion, the Chairman thanked Members, speakers and
other participants for actively taking part in the discussion. He also
expressed appreciation to WTO Director-General Azevêdo and UNCTAD
Secretary-General Kituyi for their participation in the event.
__________